Letter from the Chief Executive Officer

Sergio MarchionneDear Shareholders,

2011 marked the beginning of a new life for our Group.

The alliance established between Fiat and Chrysler in 2009 was further strengthened during the year, as we continued rigorous implementation of our goals.

Acquisition of a majority interest in Chrysler Group in May – with our interest growing to 58.5% in January 2012 following achievement of the Ecological Event – means that we are now also able to view the financial results of this newly constructed alliance.

In fact this year, the Group’s financial results include Chrysler’s for the first time and, although Chrysler was only consolidated for seven months, those results already reflect the measure of what has been accomplished through the integration so far.

The pages of this Annual Report tell the story of a unified global automaker equipped with a full product range and an extensive geographic presence, as well as the greatest level of cultural openness that either of the two organizations has ever experienced.

But we are still in the beginning stages of our plan to develop and strengthen Fiat-Chrysler: a plan that is being implemented with decisiveness and conviction.

What was achieved during 2011 is a clear demonstration of the benefits of this strategic tie-up.

Today we are far from being a marginal player.

We have become one of the strongest and most competitive automakers globally with some of the most innovative and advanced technologies in the world.

Fiat-Chrysler sold a combined total of more than 4 million vehicles for the year – making it the 7th largest automaker globally – and we are poised to grow even further.

Despite uneven trading conditions across our principal markets, with particular weakness in Europe, we achieved or exceeded all targets.

Revenues and trading profit were significantly ahead of guidance at €59.6 billion and €2.4 billion, respectively.

Total available liquidity remained strong at €20.7 billion, also well above target.

Net industrial debt totaled €5.5 billion at year end, with the increase over €0.5 billion at year-end 2010 being primarily attributable to the effect of initial consolidation of Chrysler’s debt, acquisition of the U.S. Treasury and Canada’s ownership interests in Chrysler and a healthy level of capital investment. The net debt position was reduced in the fourth quarter, however, on the back of positive operating performance and continued discipline in working capital management.

These accomplishments reflect what Fiat-Chrysler is today.

A well-balanced and unified global group equipped to effectively manage the unpredictable and volatility in the market.

A group that is solid enough to be able to protect and support any individual part of the system that may be vulnerable in a particular moment.

A group that possesses an open and competitive mentality, with the ability and determination to be a leader in its sector.

A group built on a culture of action, where the coming together of distinct industrial traditions has generated a new vitality that is propelling the business forward.

During 2011, we dedicated significant energy and resources toward accelerating the integration process.

A new organizational structure was created with leaders from both organizations to reflect the cultural and geographic diversity of our businesses.

We made significant progress in converging architectures and components, integrating purchasing activities, sharing best practice in manufacturing processes, and optimizing utilization of our combined production capacity.

Much has also been accomplished at the cultural level to merge our strengths and leverage the differences.

We have become a single group with many faces and cultures, endowed with talent and energy as never before.

This integration process is not yet complete, but we are moving forward with determination and with respect for the many identities that make us who we are and represent our true strength. Those many identities allow us to leverage the excellence of one for the benefit of all, to mutually complement each other and to create something new and better.

For what has already been achieved and for the challenges to be faced in the coming years, I want to thank everyone who – every day and in every part of the world – is dedicating their energy and passion into making this project a reality.

We know that 2012 will not be an easy year in some areas.

In particular, the sovereign debt situation and the austerity plans which are being implemented as a response continue to weigh on eurozone markets and to fuel uncertainty concerning economic prospects in Europe in the near term.

Given Fiat’s desire to maintain a high level of liquidity and the fact that Chrysler is subject to certain restrictions on payment of dividends to its members, the Board of Directors has decided to recommend dividend of €39.7 million limited on preference and savings shares only.

As announced in October, the Board of Directors also intends to propose the conversion of all preference and savings shares into Fiat ordinary shares. If approved, preference and savings shares will, in any event, retain their economic rights in relation to 2011 and new ordinary shares resulting from the conversion will be eligible for dividends declared from 2012.

The objective of this transaction is to simplify the Company’s capital and governance structure, as well as benefiting shareholders and satisfying market expectations by eliminating share classes which trade at a discount to the ordinary shares and with very limited turnover.

Fiat-Chrysler remains fully committed to the strategic direction laid out in the 5-year plans presented by Chrysler in November 2009 and by Fiat in April 2010.

Following a review of economic and trading conditions in Fiat-Chrysler’s four operating regions, we confirm expectations for performance in North America, Latin America and Asia-Pacific.

In Europe, weakened trading conditions have cast doubt on volume assumptions for the overall market and, consequently, on the Group’s own development plans up to 2014.

As a result, the Group has provided targets for 2012 ranging from a scenario of continued depressed trading conditions in Europe to a gradual stabilization and recovery at the very end of the year.

Fiat-Chrysler expects to close 2012 with revenues above €77 billion, trading profit between €3.8 and €4.5 billion, net profit between €1.2 and €1.5 billion, and net industrial debt between €5.5 and €6 billion.

The Group expects that it will be able to fully articulate the impact of economic conditions in Europe on its business plan up to 2014 at the time it announces its Q3 2012 results.

Despite the environment of uncertainty and the intense competition in the auto sector, one thing we don’t lack is the strength to compete.

We have been made stronger by the various crises we have been through in the past 8 years.

We have been made stronger by the fact that we have always challenged ourselves, which has often meant taking the more difficult path.

And we have held firmly to the values that today remain at the very core of Fiat-Chrysler and are among our most precious assets: honesty and integrity in our choices, humility and respect in our dealings with others, and an understanding that our actions have consequences far beyond the office walls or the factory gate.

Our steadfast commitment to such an approach has been recognized in many quarters.

We are one of the few auto sector companies that has been recognized as a sustainability leader with our inclusion in the DJSI World and DJSI Europe indexes – now for the 3rd consecutive year – which only admit companies judged best-inclass in managing their businesses sustainably, from an economic, social and environmental perspective.

In addition to our long-standing commitment to ecological and sustainable mobility, which has already resulted in Fiat being recognized for the fourth year in a row by JATO for the most eco-performing products among the main automotive brands in Europe, our efforts to reduce the environmental footprint of our manufacturing activities have also led to us being recognized by the Carbon Disclosure Project as one of the world leaders in combating climate change.

Based on research conducted by VIGEO, which assesses organizations on environmental, social and governance issues, Fiat has also become one of a select number of companies included in the ASPI Eurozone® index.

We value this recognition, because it serves as testimony to our sense of duty and the values at the center of how we do business which are also our principal source of pride in being a part of Fiat-Chrysler.

I want to thank our shareholders for having believed in the integration of our two groups, undertaking this new challenge together with us and supporting us as we move to the next phase.


22 February 2012



/s/ Sergio Marchionne

Sergio Marchionne




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